law of agency

creation of law of agency

-principal is liable for an act by agent in the course of business -by express appointment -by implied appointment -by ratification -by necessity -by estoppel

capacity if agent

-s.137 ca -any person may become an agent but agent who is minor or unsound mind may not responsible for his act

must pay his principal all sums received on his behalf

-s.171 ca -the agent is entitled to deduct any sum from the principal's money for advances made/expenses incurred,commission and other remuneration

implied by partnership 1961

-s.7 PA: a partner is an agent to his firm and other partner

by express appointment

-section 140 ca -the principal may appoint the agent expressly,either orally or in writing

cannot delegate his authority to other person

-section 143 -maxim:delegatus non protest delegate

disclosed principal

-the agent contracted as an agent but the identity of principal remain unknown -principal liable

Springer v Great Western Railway

-the defendant, a railway company was supposed to carry the goods to its destination -sold the goods in the middle of the way without trying to communicate with the owner to get further instruction when it is possible to do so Held: no agency by necessity: agency is liable for the loss

case under obey the principal's instruction 164

TURBIN V BILTON -the agent has been instructed by the principal to get insurance for his vessel -the agent failed to do so -the vessel lost and the principal claimed damages Held: the agent is liable for breach the duty

phelps james & co v hill

agency by necessity does not arise if there is no real urgency

effect of secret profit if principal knows and consent

agent is entitled to keep

case of the agent must expressly act as agent for the principal at the time of the contract

keighley maxted v durent -an agent bought wheat at a price higher than authorized by the principal in his own name hel: the pricipal could not ratify the contract

implied by the circumstances of the case

the creation of agency may be implied by referring to the words or conducts of the business between the parties

case act in good faith and connot let his interest conflict with his duty

wong mung wai v wong tham fatt -the agent breachedhis duty bcs sold principal's share below market value to his own wife w/o informing the principal

to pay commission and other agreed remuneration 172

-section 172 -the agent who is guilty of misconduct losses his right of remuneration

agent

a person who acts or does business for another (s.135ca)

statute

contract act 1950

agent's authority

-actual authority -apparent/ostensible authority

exception of disclosed principal

-agent made contract for sale and purchase of goods for merchant resident abroad -where principal cannot be sued

Duty to communicate with the principal

-agent must use all reasonable diligence in communicating his principal to obtain his instruction -if he fails to get further instruction, he can use his own discreation to act in order to protect the interest of his principal -Springer v great western railway

terminstion by operstion of lsw

-section 54 1. when the business of agency is completed 2. by expiration period agreed by both parties 3. by death of agent or principal 4. by subsequent insanity of agent or principal 5. by bankruptcy of the principal 6.by frustration or by happening of an event which renders the agency unlawful

Termination of agency

-termination by the act of the parties -termination by operation of law

named principal

-the agent contracted as an agent and identity of principal is disclosed -clear agency relationship: principal liable

by estoppel

-when the principal himself induce the third party to believe that a person has an act authority to act for him as if that person is his agent the principal is estopped from denying the agent's authority -when a principal does not informed to the third party that his agent has no authority/the agent's authority had been terminated, but the agents still continues acting on behalf of that principal

situation that arise apparent/ ostensible authority

-where a principal by his words or conducts leads the third party to believe in that his agents has authority to make contracts for him -where the agent previously had authority but that authority was terminated by the principal w/o notifying it to the 3rd party

exception case under obey the principal's instruction

COHEN V KITTEL Held: agent is under no duty to obey unlawful instruction

case under exercise care and diligence,and use all skills he posseses in carrying out his work :165

KEPPEL V VELLER -an agent sold a house at a lower when there was a higher offer -the agent was liab;e

by necessity

s.142 -an agent has authority,in an emergency, to all acts to protect his principal from loss as would be done by person of ordinary prudence,in his own case,under similar circumstances

principal

the person who is presented (s.135 ca)

implied by the relationship of husband and wife

wife is an agent to the husband

unilateral termination - revocation by the principal or by agent

*section 156- the principal may revoke the agent's authority at any time before the agent has exercise the authority *section 159- the principal/agent must give reasonable notice for the termination -if no notice, the agent/principal can claim for the damages -reasonable notice depends on the circumstances of the case

situation in ratification

-an agent is appointed exceeded his authority -a person who is no authority to act but act as his has the authority

condition by necessity

-emergency situation -prior contractual relationship between the parties from the beginning -the agent's action is necessary to prevent loss to principal -it is impossible for the agent to communicate and get further instruction from the principal -the act must act in good faith and reasonable circumstances

by implied appointment

-implied by the cicumstances of the case -implied by partnership act 1961 -implied from the relationship of husband and wife

termination by the act of the parties

-mutual consent-section 154 ca -unilateral termination -revocation by the principal or by agent

Effects of contract made by agent

-named principal -disclosed principal -undisclosed principal

Actual Authority

-express authority -implied authority

case under by necessity

-great northern railway company v swaffield -phelps james & co v Hill -springer v great western railway

undisclosed principal

-the existence and identity of principal is not disclosed -right of the third party: has right to claim either agent or principal or both -right of principal: may require the performance of the contract even though the third party does not know that there is a principal -right of the agent: can claim his right under the contract

great norten railway compay v swaffield

-the plaintiff had transported the defendant's horse to a station but once it arrived, nobody collected the horse -the plaintiff tried to get further instructions from the defendant but failed -the horse was stored in a stable, which the stabling charges was paid by the plaintiff -the plaintiff claimed for the charges from the defendant held: the plaintiff was an agent by necessity and entitled to the claim

mutual consent

-the principal and agent may terminate their agency relationship by mutual consent between of them -once they agreed, the agent has no authority to act on behalf of the principal -the principal would not be liable for any contract made by the agent after the termination

exception of s.143

-the principal approves the delegation -it is presumed from the conduct of the parties that the agent would have power to delegate -the custom of trade permit delegation -it is necessary to complete the bussiness -in case of necessity or emergency -where the act to be done is purely ministerial or clerical

Duties of Principal to Agent

-to pay commission and other agreed remuneration s.172 -not to willfully prevent the agent from earning his commission -to indemnify and reimburse the agent

case of unilateral termination

1. sohrobji v oriental security assurance held: a notice of 3 and half months was inadequate to terminate 50 years agency relationship. The reasonable notice is two years 2. syarikat jaya v star publication -6 months's notice was reasonable to terminate a sole agency relationship

exception of named principal

1.agent agreed with third party to accept personal liability 2.agent executes an agreement in his own names 3.agent exceed authority and principal did not ratify 4.custom of trade made agent liable

Duties of Agent to Third Parties

1.obey the principal's instruction (s.164) 2.exercise care and diligence, and use all skills he posseses in carrying out his work (s.165) 3.render proper accounts when required s.166 ca 4. duty to communicate with the principal (s.167) 5.act in good faith and cannot let his interest conflict with his duty (168) 6.cannot make any secret profit 169 7.cannot disclose any confidential information and documents entrusted to him by principal 170 8.must pay his principal all sums received on his behalf 171 9.cannot delegate his authority to other person 143

8 condition bfore principal ratifies

1.the act must be unauthorized or the agent exceeded his authority 2.the act must be recognized by the law 3.the agent must expressly acts as an agent for the principal at the time of contract 4.the principal must be in existence and have contractual capacity at the time of the contract 5.the principal must have knowledge of all material facts of the contract. s.151 ca (marsh v joseph) 6.the principal must ratify the whole contract s.152 7.ratification must be made within reasonable time (grover & grover v mathews) 8.ratification must not affect the interest of 3rd party 1.53

case of delegation authority

DE BUSHE V ALT -the principal appointed the agent in China to sell a ship -the agent was unable to sell so he sought the principal's approval to appoint a sub agent to sell the ship in Japan Held: the agent is allowed to appoint an agent in Japan as his principal has consent

case by estoppel

Freeman & Lokyer v Buckhurst Park Properties Limited -Kapoor w/o authority,hired a firm of architects and surveyors to do work for the company -the other directors even though had knowledge about this did not inform the third party that Kapoor had no authority -the third party sued the company for payment held:the company estopped from denying Kapoor's authority to actfor the. Agency by estopel existed between kapoor and the company

case of secret profit

Mahesan v Government Officers Cooperative Society -Principal instructed agent to sell a land -a vendor bought the land at certain price and w/o principal knowledge, the agent received bribe of RM122,000 -after the sale completed,the principal found out about the bribe Held:the principal may recover the bribe due to loss suffered

case under render proper accounts when required s.166

PARKER V MASON HELD:it is duty of agent to prepare and show proper account when requested by principal

to idemnify and reimburse the agent

arise in the following circumstances -the agent has incurred losses or liabilities in performance of his duties: s.175 -the agent causes injury to the third party in the execution of his authority s.176 -the agent suffers injury during the course of his duties due to the principal's neglect or lack of skill:178 ca

how can husband rebut the implied authority

by providing that -he expressly forbid his wife from pledging his credit -he expressly warned the tradesman not to supply his wife with goods on credit or -his wife was sufficiently provided the goods -his wife's was given sufficient allowance to buy goods without pledging his husband's credit -the order was unreasonable with his husband income

implied warranty

implied from the following -express authority given by the principal -custom and trade usage -circumstances of the case -conduct of the perties

express authority

expressly given by the principal orally or in writing

effect of secret profit if principal does not consent

he can -repudiate the contract -recover the secret profit -refuse to pay commission -dismiss the agent -sue the agent and/or third party for any loss -initiate criminal action under Malaysian Anti-corruption Commissioner Act 2009

not willfully prevent the agent from earning his commission

principal is said to have willfully prevent if he appointed another another agent to carry on the same duty, to deprive the original agent from earning his commission

what is agency?

relationship between principal and agent

principal choice in ratification

s.149 principal has choice -elect to ratify - principle liable -disown the act - agent liable

cannot make any secret profit

section 168 -secret profit can be defined as a bribe means extra payment,secret commission or any financial advantage from third party -also refers profit that is not revealed to the principal